On March 2, 2024, the founder of the Runes ecological infrastructure project Rune alpha started a discussion with Casey, the founder of the Runes protocol, in a public issue on Github. The two parties discussed how to expand the "public inscription" mechanism of the Runes protocol. . Topics include:
1. Should we relax the requirement that "public engraving" cannot be reserved?
2. Pointed out the view that there is no management right for Runes that adopt the "public engraving" issuance method.
3. Proposed a set of issuance mechanism ideas based on the cooperation of inscription NFT and rune FT.
Out of a strong interest in the Bitcoin derivative asset protocol, the author of this article combined some of the latest topics of Runes and wrote this article to conduct a developmental exploration of the past of Runes and Ordinals protocols, as well as similar asset issuance methods. I believe it can It will help everyone understand the Bitcoin ecosystem.
What is the Runes protocol
The so-called Runes protocol is a protocol for issuing homogeneous tokens on the Bitcoin network. The homogeneous token scheme was rebuilt by Casey, the founder of Ordinals, after releasing the Ordinals scheme. It is built based on the characteristics of Bitcoin UTXO , the overall design idea is very simple.
It is worth mentioning that the Runes protocol plans to launch the mainnet when Bitcoin halves in 2024 (block height 840000), that is, in late April this year. The Runes protocol is still in the process of optimization and version iteration.
Before briefly introducing the principles of Runes, let us quickly understand the context and what the so-called "public engraving" actually means.
Casey, the proposer of Runes, did not have the idea of a homogeneous token protocol at the beginning. As early as December 2022, Casey released the Ordinals protocol with the intention of permanently chaining NFT data to Bitcoin. Simply put, it will NFT metadata is like an inscription, recorded in the witness data of Bitcoin transactions (witness mainly contains digital signature information), so that any form of content (such as text, images, etc.) can be engraved on the designated Satoshi.
Subsequently, the gears of history began to turn. On March 8, 2023, anonymous developer Casey based on Ordinals, a typical NFT issuance protocol, in a roundabout way came up with a set of BRC-20 standards for issuing homogeneous tokens, which is based on inscriptions. This method stipulates a unified format and attributes (Token name, total supply, maximum single minting amount, etc.) for the derivative asset data that needs to be uploaded to the Bitcoin chain, and then uses the indexer to parse and track this information. Shows the wallet account and asset amount related to BRC-20 tokens.
Here’s the key. The issuance of BRC-20 depends on the Bitcoin inscription NFT protocol like Ordinals. Therefore, the initial issuance mechanism becomes similar to the NFT casting process. It naturally has the characteristics of “first come, first served”. Whoever comes first Whoever owns Mint is completely different from when Ethereum ERC-20 assets are issued, "the project party first deploys the asset contract, defines the asset distribution mechanism, and the official can control the market however they want."
This Fair Launch feature gives most people a fair chance to participate in the initial issuance of homogeneous tokens. The project side has no reservations and no lock-ups, and everyone can participate as soon as the assets are initially issued. Soon, BRC 20 brought a boom in the issuance of derivative assets on the Bitcoin chain, and even directly started this bull market. It can be seen that the "public inscription" issuance method we are focusing on today is very important to the Runes protocol.
But BRC-20 also brings many problems: every operation of BRC-20 assets must initiate a specific transaction on the Bitcoin chain. With the popularity of BRC-20 assets, the Bitcoin UTXO data set is also expanding rapidly. This caused BTC core developers to openly question BRC-20.
Ordinals founder Casey not only opposes BRC-20, but also does not recognize the FT assets issued based on Ordinals. However, the popularity of BRC-20 made him feel that although 99% of tokens are scams and gimmicks, these things It will still be like a casino that cannot go away.
At the same time, BRC-20 has left "excessive traces" on the Bitcoin chain, which has brought a burden of data carrying to Bitcoin nodes. However, if someone comes up with a set of solutions that can "reduce the burden" of on-chain data, Asset agreements may be able to alleviate the problems caused by BRC-20.
So Casey decided to build a "better homogeneous token protocol" for Bitcoin, and then on September 25, 2023, he released the preliminary concept of the Runes protocol.
From a technical perspective, the Runes protocol is built based on Bitcoin UTXO and additional information. The triggering of each transaction requires the digital signature information generated off-chain on the chain. We can carry messages in a specific format in the signature information. The Runes protocol marks "specific messages" through the OP_RETURN opcode. These specific messages are information related to Runes asset changes.
Compared with the BRC-20 protocol, Runes has many advantages, the most important of which are:
1. The transaction steps are simplified and no redundant useless UTXO is generated, which can better "reduce the burden" for Bitcoin nodes. In addition, a transfer transaction of BRC-20 only supports one recipient and one token, while Runes supports transfers to multiple recipients at the same time, and can transfer multiple Runes tokens.
2. The storage and indexing of asset data is more concise: BRC-20 data is stored in the witness data of a specific transaction in JSON format, and BRC-20 is based on the account model, and the asset balance is associated with the specified account. The data of the Runes protocol is stored in the OP_RETURN field of a specific transaction, and the recording method of assets adopts the UTXO model, which can be directly "isomorphically bound" to the UTXO on the Bitcoin chain.
When confirming a person's Runes asset status, you only need to verify the special UTXO that the person owns and is bound to the Runes asset. Although some information still needs to be traced back to complete the calculation, there is no need to scan the Bitcoin chain like BRC-20. Complete UTXO collection, this lightweight approach is more friendly to data indexing.
3. Compatible with UTXO function expansion layers: Runes’ UTXO-based design makes it better compatible with UTXO-based function expansion layers such as CKB, Cardano, and Fuel. Through "UTXO isomorphic binding" similar to RGB++, the above function expansion layer can provide smart contract scenarios for Runes.
After briefly talking about technology, let’s return to the issuance mechanism discussed at the beginning of this article. Casey designed two sets of issuance methods for Runes, namely "fixed total amount" and "public engraving":
1. The fixed total amount means that the issuer directly inscribes all Runes and then distributes them, which is relatively more centralized.
2. Public engraving is to set parameters for the issuance method of Runes, such as specifying a block height or timestamp. Within the time period that meets the rules, how many assets the user mints will be the total amount of the runes in the end.
The scenarios and mechanisms corresponding to the two distribution methods are completely different. In the following, we will only talk about “public engraving”.
In fact, Sondotpin started discussing this topic in Issues#124of Runes, which was endorsed by Casey.
The specific contents of Issue#165are as follows:
Sondotpin: In the current public issuance, project parties/issuers cannot reserve Runes in advance, which limits the project party’s opportunities to design excellent token economic models.
Casey: Please see previous Issues#124. I'm considering relaxing this requirement to allow publishers to arrange runes in a reasonable way at the time of release, even outside of the parameters set. If designed in this way, relevant information will be displayed very prominently on the details page of Runes.
Sondotpin: Is it possible to design a multiple issuance mechanism, such as two rounds of "public engraving" Runes, and then set different parameters for each round of issuance?
Casey: I'm not inclined to do this because Runes don't have a "manager" per se. Distribution authority should not be in the hands of a single entity with special authority. But you can add an inscription when issuing runes, and then issue new runes based on this inscription, so that the runes issued twice are the same assets. Of course, you can also use pre-mining and then issue it using other distribution methods.
If the function of CTV can be launched smoothly in the future, there will be no need for protocol support. CTV can directly pre-set condition templates. Once the conditions are met, airdrops and public offerings can be made that meet the conditions.
Discussion surrounding Casey and SonPin, personal opinion:
1. In the early stages of launching a project, it is indeed necessary to reserve some Tokens
In the early days, if the project party wants to bootstrap the business, it needs a certain amount of token reserves to motivate the core team and unite the community. If the agreement can be implemented according to this discussion, it will complement the fairness and universal participation value of "public inscription" and allow more valuable basic project parties to participate in the Runes ecosystem through "public inscription".
2. Whether and how to reserve is to hand over the means of self-certification to the issuer.
In fact, Casey has bluntly stated in Youtube videos many times that 99.9% of homogeneous tokens are scams. Don’t pretend to change the world. Frankly admit that this is an industry full of gambling and speculation. With sincerity, Treat each other well and be kind to everyone. IT’S JUST FOR FUN!
From issue#124to #165, we can see that Casey has more recognition of the usage scenarios of homogeneous tokens. There is no need to question the method of "public engraving". Expanding on this basis, such as adding a reservation mechanism, is to hand over the right of choice and self-certification to the issuer, and is also a good way to prevent bad coins from driving out good coins.
3. Inscription NFT and rune FT will have more room for innovation
Casey's idea of a multi-round issuance mechanism for inscription NFT and rune FT to cooperate with each other is quite interesting. As mentioned in the background knowledge, Ordinals and Runes are both protocols designed by Casey. They should be regarded as two parallel protocols. However, they are both implemented on Github. In the Ord project, there are many technical crossovers and collaborations, such as sharing the synchronization area. Blocks of underlying logic.
The current hot projects such as Runes tone and Runecoin are also innovative combinations of inscriptions and runes. The way of playing Runecoin is the most mainstream inscription pre-mining. Holding the RSIC inscription issued by Runecoin will continuously dig out the runes of the project, and then allocate FT when the Runes protocol goes online at the end of April. We look forward to more projects in the future that can bring forth new ideas and bring more novel ways of playing.
4. There is no ownership of Runes issued using the "public engraving" method.
Casey's original article only expressed that "Rune does not have ownership", but the author believes that this should specifically refer to the lack of ownership of Runes that adopt the "public engraving" distribution method. The two-round "public engraving" plan proposed by SonPin will definitely be operated by an address with extremely high authority. This is not what the Crypto encryption field wants to see.
Just like the project Runecoin, after issuing 21,000 RSIC inscription NFTs, it quickly transferred the parent inscription to Satoshi Nakamoto's address, which means that no one can use it again, that is, it promises not to issue additional issuances through technical means. This operation itself brought a lot of praise to it, which made it very popular among passers-by.
PS: What is the father inscription?
Because the interaction speed in BTC is slow and gas is high, when the number of operations is relatively large, in order to improve efficiency, a parent inscription is usually set up first, and multiple child inscriptions are directly processed in batches in the transaction of the parent inscription. This can When interacting, save the storage space and processing time of the blockchain.
Finally, let’s talk about the CTV mentioned by Casey, which is “Check Template Verify”.
CTV is a proposed protocol upgrade for Bitcoin that aims to enhance the smart contract and locking capabilities of the Bitcoin network by allowing users to specify a template for future transactions when creating a transaction. The activation of CTV will enable users to create more complex transaction types, such as trusted airdrops and open etch, without explicit support from the protocol.
This CTV proposal increases the programmability and flexibility of the Bitcoin network. It was mentioned in this discussion that simply speaking, it is possible to create an unlocking condition template using UTXO, giving Runes the opportunity to create more gameplay. For example, through the "Runes Protocol + CTV", 10 users can jointly use CTV technology, jointly mint runes, and then preset some future Bitcoin payment transaction commitments.
Disclaimer: This article is for reference only and may not be used as legal, tax, investment, financial or any other advice and does not represent the position of RunesCC.
